Superior Drilling Merchandise, Inc. (NYSE:SDPI) This autumn 2022 Earnings Convention Name March 10, 2023 12:00 PM ET
Firm Members
Craig Mychajluk – Kei Advisors LLC
Christopher Cashion – Chief Monetary Officer
Troy Meier – Chairman and Chief Government Officer
Convention Name Members
Richard Ryan – Oak Ridge Monetary
Ignacio Bernaldez – EF Hutton
John Sturges – Oppenheimer
Operator
Greetings and welcome to Superior Drilling Merchandise Fourth Quarter Fiscal 12 months 2022 Monetary Outcomes. Right now, all members are in a listen-only mode. A quick question-and-answer session will comply with the formal presentation [Operator Instructions] As a reminder, this convention is being recorded.
It’s now my pleasure to introduce your host Craig Mychajluk. Thanks, Craig. It’s possible you’ll start.
Craig Mychajluk
Yeah. Thanks. And welcome everybody to our fourth quarter full yr 2022 earnings convention name. We actually respect you becoming a member of us right this moment.
Becoming a member of me are Troy Meier, our Chairman and Chief Government Officer; and Chris Cashion, our Chief Monetary Officer. Chris will first assessment our leads to element after which Troy will present an replace on the corporate’s strategic progress, after which we’ll open up for Q&A.
It’s best to have a duplicate of the monetary outcomes that had been launched earlier than the market this morning. You also needs to have copies of slides that accompany our dialog right this moment. If not, each paperwork may be discovered on our web site at sdpi.com.
Turning to slip two, I am going to level out that we could make some forward-looking statements in the course of the formal dialogue, in addition to in the course of the Q&A session. These statements apply to future occasions and are topic to dangers and uncertainties, in addition to different elements that might trigger precise outcomes to vary materially from what’s acknowledged right here right this moment. These dangers and uncertainties are offered within the earnings launch, the slides and different paperwork filed by the corporate with the Securities and Alternate Fee. These paperwork may be discovered on our web site or at sec.gov.
I wish to additionally level out that in right this moment’s name, we’ll talk about some non-GAAP monetary measures, which we consider might be helpful in evaluating our efficiency. You shouldn’t contemplate the presentation of this extra info in isolation or as an alternative choice to outcomes ready in accordance with GAAP. We now have offered reconciliations of non-GAAP with comparable GAAP measures within the tables accompanying the earnings launch, in addition to within the slide deck.
So, with that, please flip to slip three and I am going to flip it over to Chris to start. Chris?
Christopher Cashion
Thanks, Craig. And thanks everybody for becoming a member of us right this moment. We had a robust fourth quarter that stored off a file yr as our staff continued to execute very effectively to satisfy growing demand for our instruments and contract companies companies. This slide highlights various our accomplishments, which included spectacular high line progress for each the quarter and the total yr as we proceed to see improved market circumstances and a few very robust buyer demand, which we anticipate to proceed all through 2023.
The leverage that we gained from greater gross sales quantity led to a considerably improved working and EBITDA margins, which translated into a really robust backside line consequence. For the 4 yr 2022, we achieved our highest stage of internet revenue since being a public firm. With our robust money technology, we continued to strengthen our stability sheet by decreasing debt 33%, whereas making vital capital investments to broaden capability to accommodate elevated work and in help of future demand.
Now let’s flip to slip 4, which offers an outline of our income progress. This autumn income grew to $5.3 million, up 33% year-over-year, reflecting the restoration of the oil and fuel market in North America, which resulted in robust demand for our Drill-N-Ream, and contract companies companies. We additionally noticed enhancing market circumstances within the Center East the place we had been starting to realize income traction.
For the total yr 2022, complete income elevated 43% to $19.1 million. We now have been benefited from an growing rig depend, though we did see rig recount progress average within the second half of calendar yr 2022. The common US rig depend was 775 within the fourth quarter, up 14 rigs from the sequential third quarter and up 216 rigs from the common within the fourth quarter of final yr. Over the close to time period, it’s our expectation that the North American rig depend will stabilize round these ranges.
On the worldwide entrance, we have now seen robust income progress, up 79% within the quarter, which mirrored in enhancing market circumstances and a strengthened technical gross sales and advertising and marketing staff within the Center East. This staff is opening doorways and driving higher consciousness of our Drill-N-Ream worth proposition. Our worldwide gross sales combine improve to roughly 14% of complete income in the course of the quarter. As you might recall, this combine had been hovering round 10% for the final yr or so. We’re very inspired with the various alternatives within the Center East area and anticipate that blend shift to proceed to pattern upwards.
Now let’s transfer on to slip 5 and assessment a breakdown of our software and contract companies enterprise. Fourth quarter contract companies income was $1.9 million, nearly double the prior yr interval, and was up 65% to $6.7 million for the total yr. We continued to efficiently meet our long-term legacy clients’ progress in demand for manufacture and refurbishment of drill bits and different associated instruments.
Software income additionally noticed measurable progress for the quarter and yr, given our improved market penetration within the Center East, and as our North American channel associate continues to drive new software gross sales. We’re additionally benefiting from elevated exercise on extra rigs, which results in greater restore and royalty income.
As you’ll be able to see on slide six, we have now continued to put money into folks to handle buyer demand whereas nonetheless combating inflationary headwinds for payroll, uncooked supplies, and different prices. Importantly, although, we have now successfully leveraged these bills with greater gross sales volumes, which drove considerably improved working revenue of $700,000 in This autumn, and $2 million for the yr. Of notes, whereas the rise in SG&A displays our workforce enlargement, it additionally contains continued litigation prices related to the corporate’s patent infringement lawsuit.
Simply as a reminder, we’re suing third-party over violations of the patents on our drilling rig software. Throughout the fourth quarter. The lawsuit progressed quickly with interrogatories, manufacturing requests and depositions, thus the explanation for greater authorized bills within the quarter. As of now, the jury trial is about to start within the fall of this yr.
Now, on slide seven, we have now our backside line and adjusted EBITDA outcomes. Trying on the annual charts on the appropriate, it actually demonstrates the progress we’re making to develop our enterprise to be able to improve our earnings potential. Our adjusted EBITDA margin for the yr expanded 500 foundation factors to 24.7%. There are a few gadgets to level out inside the quarterly outcomes. 2021 fourth quarter included a $700,000 different revenue merchandise associated to the restoration of a associated get together receivable, whereas the 2022 fourth quarter didn’t have an identical profit. Additionally, you will notice a slight dip within the adjusted EBITDA from third quarter. This was the results of that extra litigation expense that I simply talked about beforehand.
Now shifting onto slide eight. We spotlight our stability sheet, which has continued to considerably strengthen. Money generated from operations for the yr was $3.5 million, a major enchancment over $500,000 within the prior yr. This variation mirrored greater internet revenue and improved working capital, partially offset by a rise in stock to fight some provide chain inefficiencies and a rise in that stock to help our progress.
Complete debt at year-end was $1.7 million, down 33% from the top of 2021, largely as a result of remaining $750,000 precept cost that we made on our Exhausting Rock observe in October of 2022. Full yr CapEx was $3.3 million, consisting of two new machining facilities, a rise in Center East Drill-N-Ream software fleet, and better upkeep actions. We ended the yr with 2.27 — $2.2 million of money, a strong money place contemplating our CapEx investments and debt paydown all year long.
Now let’s transfer to slip 9, which offers our steerage. We anticipate 2023 income to be within the vary of $24 million to $27 million, which suggests high line progress at 34% utilizing the midpoint of that vary. SG&A bills are projected to be between $9 million and $10 million. This can be a step up from the place we led to 2022, largely reflecting litigation prices of roughly $1 million associated to that ongoing patent infringing lawsuit. The SG&A expectations additionally taken into consideration the investments we’re making in our worldwide technical gross sales and advertising and marketing staff, which is able to drive future worldwide progress. Regardless of these added prices, we anticipate adjusted EBITDA within the $6.5 million to $7.5 million vary, which suggests an EBIDA margin of 27.5% on the midpoint. That stage is sort of 300 foundation factors greater than our 2022 outcomes.
Lastly, we’re concentrating on capital expenditures of between $3 million and $3.5 million. That is typically according to the previous yr’s funding, although the main focus will largely be on worldwide new software additions to our fleet within the Center East.
So, with that, I will flip the presentation over to Troy to wrap it up with a assessment of our outlook and alternatives each in North America and the Center East area. Troy?
Troy Meier
Thanks Chris, and thanks all people for becoming a member of us right this moment. We flip to slip 10 for the outlook and alternatives. We’ll begin with North America and speak just a little bit about what we have now occurring there and what these alternatives are.
One of many issues that we’re seeing proper now’s, is our channel associate DTI continues to make penetrations into the market, promoting the worth of the Drill-N-Ream software. We’re additionally beginning to see their stock begin to roll over as these instruments that they’ve are hitting their life cycle. We’re beginning to reduce out instruments and substitute these instruments with new Drill-N-Ream.
We’re additionally seeing operators which might be altering over to completely different drilling applications, primarily going to completely different connections, threaded connections primarily based off of the drill pipe that they’ll get or change within the effectively profile itself. And that is driving Drill-N-Ream gross sales as effectively. These operators are in a position to now — like within the Delaware, we have got operators which might be drilling three and 4 mile laterals utilizing the Drill-N-Ream. So, it is — lots of pleasure across the software and what is going on on there, and we’re very proud about what they have been doing.
Whenever you have a look at our legacy associate, once we speak in regards to the refurbishment, they’re doing a improbable job in creating extra market share for them. They’re penetrating the markets deeper with their product line, and we’re seeing these volumes improve. So, we have equipped for that. We have educated for that. We have got the appropriate folks in place, and the staff has taken care of that want, that demand, that very robust demand very, very effectively.
However you see on — once we look inside our facility, once you go to the campus, you are seeing, we have got two new machining facilities that we talked about. We bought these on the finish of final yr. We have got these in place and now they’re up. And Roland, we’re very excited in regards to the improve in our manufacturing that these can do. However it additionally provides us that backup, if you’ll, that that security internet. Earlier than we simply had on giant drilling instruments, we had two instruments that might work on, or two machining facilities that might work on them. And now we have now three and so they’re busy. We’re placing out lots of Drill-N-Ream, and it is very thrilling to see.
We have got managers which have taken possession of their departments, and we have got QMS methods, very robust ones that are actually taking maintain. And the standard and the construction round that high quality system is de facto spectacular to look at. We have got — we have put in place our security administration system. We have carried out that — our SMS system, we name it, and we have created particular coaching modules only for Superior Drilling Merchandise.
Lot occurring there. We have employed effectively. We proceed to rent. We’re retaining staff members, and we’re getting them educated proper and quickly and getting them out into the store flooring the place they’re turning into a really productive a part of our staff.
If we have a look at the worldwide scene, like Chris mentioned, there’s lots of pleasure there. We now have — our staff over there may be doing an outstanding job. We have got a really extremely technical gross sales and advertising and marketing staff now in place that’s figuring out the shopper’s wants and understanding the PDC product itself. And it is bringing in giant calls for for our instruments. And talking of enormous, we have now a — we have now a really heavy demand for big instruments. After we have a look at the software measurement right here in North America, you are going to — you common proper there in that eight inch measurement vary between — we’re on lots of six inch measurement vary. We run some 12-inch, some 10. Over within the MENA area, the place we have launched the Drill-N-Ream and been in a position to show its worth. We’re now working 16 inch instruments. We’re getting requests for 17-inch instruments, which we’re at the moment making, placing these by way of manufacturing and huge demand. A number of 12-inch collection instruments. So the scale of the instruments that we’re seeing going over to our Mid East staff are a lot bigger than we have now right here.
We’re having file setting efficiency. Our staff is setting down with the operators and figuring out good alternatives for the Drill-N-Ream, and we simply had some file setting runs in Oman, with the longest laterals that they’ve drilled to this point each of them used within the Drill-N-Ream. So, we have now lots of pleasure across the product line over there and the chance that we have now.
You heard us speaking in regards to the know-how middle that we’re placing over there, the service and know-how middle. We glance to have that opened in Q2. The tools is being put in, manufactured and put in. That is going to open up an incredible quantity of alternative, as soon as we have now that facility in place. What we do right here in North America, we’ll be capable to duplicate over there may be we begin repairing our personal fleet to reinforce our efficiencies in getting that stock repaired and again out into the sphere. However we are also going to have the ability to have a look at the alternatives that we’re very conversant in once we speak in regards to the refurbishment of enormous servco product. We’re very enthusiastic about that as effectively.
So, once you have a look at general what we have got for alternatives going ahead, it is — we’re very, more than happy with what we have been in a position to put into place and the way it’s beginning to develop and show out.
So, with that, I will go forward and switch it over to the Q&A session.
Query-and-Reply Session
Operator
Thanks. We are going to now be conducting a question-and-answer session. [Operator Instructions]
Thanks. Our first query is from Dick Ryan with Oak Ridge Monetary. Please proceed along with your query.
Richard Ryan
Thanks. Troy and Chris, congratulations on a robust 2022 and the nice outlook for 2023. I assume my first query can be on simply sort of the macro vitality aspect. Gasoline costs have come down fairly dramatically and that is inflicting some drilling within the Haynesville to sort of be placed on the shelf and possibly even some rigs shifting out of Haynesville into West Texas. Is that creating any points out of your outlook with what you are seeing domestically within the close to time period?
Troy Meier
No. No, we’re not seeing any points with that. Such as you mentioned, in the event that they transfer out of the Haynesville and decide up into primarily anyplace, whether or not it is Oklahoma, Colorado, Utah, Texas. We have talked in regards to the lack of individuals in a few of these locations that may really go on the market and help the standing up of rigs. And this will assist that, as we begin shifting drilling groups and firm males to those areas to face up these rigs, I believe it may be helpful for the oil portion of the drilling right here on this nation.
Richard Ryan
Okay. Your efforts to broaden your contract companies past the legacy buyer, the place does that stand and also you anticipate bringing in a second or potential third buyer this yr? Or will that be extra of a 2024 story?
Troy Meier
No. It will be this yr. It will be ASAP. We have — one of many issues that we have performed is — we have wanted more room, extra roof line inside our campus as we have regarded to broaden. Our machining facility is now taken two of the 5 buildings. And so, we have moved all the Drill-N-Ream operations off campus to a brand new facility, and that is opening up 7,000 sq. foot in an unbiased facility. So, primarily, constructing one will now have that capability to deliver on a second buyer. And we have got these events which have been ready for us to get this performed.
We now have agreements. We now have settlement already in place, and we’re wanting ahead to increasing on that chance. And we have simply — we wish — it is — we have got to maintain work separated. We will not co-mingle anyone’s product line. So, we have been ready for this chance to broaden after which hold exclusivity in a single facility to 1 buyer, an exclusivity in one other facility to a different buyer. We do not need anyone ever crossing over and saying, hey, we received know-how in there that we do not need our opponents to see. So, we’re conserving that, that very, very a lot segregated. However yeah, you will, you will see us begin doing that very quickly.
Richard Ryan
With a second buyer, would you be taking enterprise away from their inside group of refurbishing? Or is that — will you be taking it away from one other third-party that is at the moment doing it?
Troy Meier
No, no person makes use of a third-party. So far as I do know, we’re the one third-party on the market. We’re simply supporting — we’re supporting the efforts internally for these corporations. They — it is a difficulty that we have now with all people on the market. After we have a look at the massive servcos and them making an attempt to handle folks, it is a tough activity and we really feel that we’re setting very effectively in our portion of Utah. We have got a really devoted workforce. And what we’re doing is simply supporting the wants the place they can’t get this performed in home. And so, we’re stepping in and doing it for them.
Richard Ryan
Okay. Okay. One final one for me. On the worldwide aspect, Dubai has seen a major improve in property values, whether or not you are proudly owning or renting. Has that precipitated any points and also you standing up your facility there and it appears like you are going to be hiring and doubling the workers? Are you able to give a perspective of, for instance, how certified that workers might be on the finish of 2023 versus what you’ve got had at some other earlier time over there?
Troy Meier
Our present workers proper now could be very, very certified. We’re hiring the appropriate those that have frolicked within the excessive finish gross sales and advertising and marketing of very giant corporations, and so they know the ins and outs on the gross sales and advertising and marketing, and so they know the technical shows that their clients need. I am extraordinarily impressed with the those that we have been in a position to deliver on over there — over the past yr. It is wonderful. We have got a staff that does post-run reviews and exhibits our clients the worth of the product we simply –they simply ran. We have got — we’re concentrating on gross sales. We all know that the instruments that we’re making right this moment, we all know what holes they are going in 5, six months down the street. We’re simply not making product to say, they’re selecting up rigs in Kuwait, they’re selecting up rigs within the UAE, so let’s construct a bigger stock. Our staff is directing these gross sales at drilling merchandise, or sorry, initiatives, and so they’re doing an incredible job with that. So, I could not be anymore — I imply, our staff over there may be doing an outstanding job and we’re all — you are going begin to see the advantages of that as we roll by way of this yr and go into subsequent. It is wonderful what they’re doing.
Richard Ryan
Nice. Thanks and congratulations once more.
Troy Meier
Thanks.
Operator
Thanks. Our subsequent query is from Ignacio Bernaldez with EF Hutton. Please proceed along with your query.
Ignacio Bernaldez
Hey, Troy and Chris. Thanks in your time right this moment and congrats on the quarter.
Troy Meier
Thanks.
Ignacio Bernaldez
Yeah, after all. I assume to begin, may you speak just a little bit about among the challenges in getting into the Center Jap market that you simply — that you simply’re dealing with proper now or probably seeking to face?
Troy Meier
Proper now, our largest problem is as we gear up, is supplying the demand. It is — as we go into bigger instruments, like I might talked about, our common measurement over there may be, is over 12-inch. And so be getting that stock designed and put within the gap, that is what we’re doing proper now. We’re having a robust demand for upcoming drilling applications and we’re actually simply working proper now in two nations and we’ll be going into a pair extra by yr finish. And we’re getting pooled into these nations with the request of now that they are beginning to see what the Drill-N-Ream worth is. Actually when you have a look at the struggles and the problems that we had been having or had, it was us going over there as an especially small firm making an attempt to step throughout the pond and determine the way to do enterprise within the Mid East. And there is — we went over there in 2018 and we began wanting and we began working with servco and figuring the ins and outs of the way you — simply — I imply the banking, the invoicing, the logistics, and it is by no means constant. It appears to at all times be altering and — however we have now received a staff that — the banking has develop into a neater, and the logistics, we’re beginning to perceive significantly better.
Our clients now perceive the worth of our software. And we have got sufficient previous efficiency now that we will set down in entrance of them with previous efficiency and present them what their customized — our clients have been in a position to save and obtain through the use of our product. And it is — I am not going to say it is develop into simpler as a result of it is simply — it is quite a bit higher battle now than what it was earlier than. As a result of now that — now the battle is constructing that firm to — and I should not say it is a lot of a battle as it’s only a problem. And we’re as much as the problem and our staff’s doing a improbable job. So, I really feel significantly better about our Mid East alternatives right this moment than I did a yr in the past and even two years in the past. I imply, it is — we have got popularity over there and our software is displaying super worth.
Ignacio Bernaldez
That is actually useful. Thanks very a lot. And once more, congrats on the quarter.
Troy Meier
And take note, once you have a look at over there, they’re including rigs, they’re — once you have a look at the quantity of rigs that they are bringing into that they’ll be standing up within the Center East, it is fairly spectacular once you see the quantity of rigs that a few of these nations are bringing in and going to begin standing up.
Ignacio Bernaldez
I assume one fast — thanks for that. And one fast comply with as much as that. I assume when you may simply stroll me by way of sort of distinction in margins between merchandise in North America and the Center East and the way we must be fascinated by that.
Troy Meier
Yeah. It is — as soon as we sort of get to a constant run price within the Center East like we have now right here within the U.S., the margins going to be actually related. We’re constructing — we’re placing value in SG&A. We’re constructing instruments. Depreciation expense to be hitting the P&L. And so, these margins are considerably depressed in 2023 as we transfer ahead due to the investments that we’re making.
So, once you begin wanting in 2024 and past, you are going to begin seeing margins similar to the U.S. The fascinating factor in regards to the Center East is that typically you begin with a better high line and that is what the Center East is sort of identified for you. You improve your costs within the Center East versus the U.S. However what lots of people do not actually totally perceive is you are received bills that you will incur. And so by the point you get to a backside line, you are — it will be fairly just like your U.S. margins. And generally there is a pondering that, yeah, you are worldwide after which the margins are going to be — simply two x, income may be two x, however value may be two x as effectively. However the backside line is the margin goes to be related. However I would not search for them to be related in 2023. We’re rising that enterprise quickly, and so we’re investing in it closely, as we have mentioned. And so, I might anticipate the margins to be considerably much less in 2023 versus 2024 and past.
Ignacio Bernaldez
Thanks. Thanks for the colour. I actually respect it.
Troy Meier
You wager. Thanks.
Operator
Thanks. Our subsequent query is from John Sturges with Oppenheimer. Please proceed along with your query.
John Sturges
Thanks very a lot. Congratulations on the yr and really you’ve got come by way of fairly a interval, overcome many obstacles, so I am simply glad to see it. The query I’ve is de facto the colour, going from an 18-inch, an 18, sorry, an eight-inch wellbore to 17 with the Drill-N-Ream, which is — has superior traits that will increase the board floor by about 3.5 fold. Is there an effectivity of the effectively that’s pushed by that, and is that one of many drivers that the drilling rig brings to manufacturing?
Troy Meier
Yeah. We see within the high a part of the entire, within the midsection of the wells which might be drilled that we’re seeing within the MENA area. It is quite a bit completely different formations than what we’re used to drilling right here. It is a more durable. It is received lots of caverns. It is onerous on instruments. It is onerous on — you get lots of misplaced circulation zones. And so, it is a tough. It is a tough part for operators to drill. It is at all times difficult. And so what they love to do is with the Drill-N-Ream, if they’ll — if they’ll get that wellbore conditioned and get that casing down in there and get behind pipe, get these areas behind pipe, the faster they’ll do this, the higher off they’re. It provides them a possibility to not lose the effectively. And so what we’re discovering with Drill-N-Ream is it helps them do this.
We at all times speak about, we improve that drift. In all probability a great way to place some colour round it. When you had been to — when you had been to take a look at, simply look straight down right here — there is a good — there is a good report that [indiscernible] in a few of their wells up within the Bakken. They usually — you’ll be able to look straight down in a — down in a vertical effectively, and so they used to measure that effectively. They’d go from each 120 ft, they’d take a studying and they might see what this — the trajectory of this effectively was doing. And there’d be just a little bend to the appropriate, little bend to the left. However after they began measuring that each 30-feet, it gave them a completely completely different image. And this one case that I used to be proven an eight and a half inch gap over a interval of — I wish to say it was 260-feet. The precise diameter, handed by way of diameter was lower than 5 eights of an inch. So, when you can consider wanting in an 8.5 inch gap, and by the point you look all the best way to the underside, you are simply — you’ll be able to — you are seeing by way of lower than 5 eighths of an inch. And usually you simply — your casing will bend and it goes down in there and also you get it cemented and all the things’s superb.
However when you can improve that drift, when you can take that Drill-N-Ream and improve that drift to the place now you do not have strain factors on that casing, and your cement — and your cement job is significantly better and rather more uniform, what you are going to discover is these wells that you simply drill right this moment are going to take much less upkeep two years from right this moment when you do not have to return and restore your casing the place it is received pinch factors. And in order that’s one thing that we see an enormous want for once we’re speaking that worldwide market. And why do they use these large instruments up greater within the gap?
Did that reply your query?
John Sturges
No. It is an awesome reply by the best way. However not fairly. I am fascinated by the horizontal part. Would a bigger diameter software, it should produce a higher floor space. And would that then be extra of an environment friendly effectively. And the Drill-N-Ream has the popularity for being extra vitality environment friendly to the bigger, going from eight to 17 inches. That by itself would improve the floor space by 3.5 fold. I am simply questioning if –?
Troy Meier
Yeah. Whenever you have a look at the bigger instruments, all the things that we do this’s bigger is all within the higher sec. It is earlier than the curve. It is all above the curve. So, yeah, that is in all probability probability to make clear. After they go and do their curve and lay down and begin drilling their lateral, they too are beginning to — they go to the six-inch collection. So, the massive software to have the ability to be capable to get the torque that may be required to take that measurement of drill pipe and that measurement of BHA and rotate it over a distance in a lateral, we might actually have to begin designing new stronger drill pipe. And we might have to essentially be capable to improve. Proper now, when you have a look at the pumps that they’ve on the market, it wasn’t that way back — I might design merchandise to that had been — the gallons per minute can be 200, 210. And now we’re at 800 plus gallons per minute, as we drill these wells so shortly with the smaller diameter lateral.
I am unable to think about the scale of pumps that we must have to have the ability to deliver the cuttings from a 12-inch or a 14 or a 16 or an 18-inch wellbore and produce them across the curve and up the floor. That might be unbelievable. I am not saying it could not be performed, nevertheless it’s in all probability one thing that is additional down the street.
John Sturges
Okay. I actually respect you entertaining the query. That was very useful.
Troy Meier
Thanks.
Operator
[Operator Instructions]
Our subsequent query is from Paul [indiscernible] with — non-public investor. Please proceed along with your query.
Unidentified Analyst
Good day, sir. Congratulations on doing job.
Troy Meier
Thanks, Paul.
Unidentified Analyst
Okay. Is there any consideration in any respect going ahead of constructing an acquisition to go with the corporate?
Troy Meier
Sure, that is one factor we have now our eye on. As we’re going ahead, we had been mentioning this to buyers final yr. We now have our M&A hats on, and I believe you will see us bringing on a banker right here earlier than too lengthy that we’re — as we invested the correct banking staff. Yeah, we all know we have got a scale and scale a lot faster than we at the moment are, however the one factor we needed to do was show the worth of the instruments and repair that we offer in order that the those that have invested into Superior get return on their funding.
Unidentified Analyst
Is that one of many the explanation why you are growing the money place?
Christopher Cashion
Not likely. It is extra the necessity to fund extra instruments into the Center East. It is extra natural progress, is the explanation that we’re enhancing our money place. After we’re speaking about acquisitions, that that’ll be — when did you go exterior on that? When did you increase that capital? However no, this simply — our money goes into natural progress.
Unidentified Analyst
Okay. And I’ve one final query. I do know you are primarily concerned within the oil enterprise, however is there any consideration of possibly dipping into the mining sector?
Troy Meier
We have performed some work within the mining sector up to now. Sometimes, what we have a look at is — they have a look at very small. When you have a look at our experience on the bits and the reaming instruments, that kind of factor is usually performed in small sizes and huge volumes. And the tools that we have now that work envelope is for big instruments. And so, we get requests and there is generally that we’ll step into the mining sector, however it will should be one thing that we have a look at and say, can we wish to put money into the tools to do this? However it’s one thing we have a look at. And each infrequently we’ll do one thing for the mining sector, and it proves out — it proves to work. However then once we have a look at the value and our — we simply hold sliding again into the oil and fuel sector. However I am not saying it is one thing we cannot entertain right here as we go ahead. We’re very conversant in it.
Unidentified Analyst
Thanks for answering my questions, gents.
Troy Meier
Thanks.
Christopher Cashion
Thanks.
Operator
Thanks. There aren’t any additional questions presently. I might like handy the ground again over to administration for any closing feedback.
Finish of Q&A
Troy Meier
I wish to simply inform all people thanks for becoming a member of us right this moment, and we look ahead to presenting our Q1 right here — what two months is that …
Christopher Cashion
Subsequent week.
Troy Meier
… looks like subsequent week. However no, we’re wanting ahead. I imply, it is very thrilling. We’re having — we’re busy. We’re extremely busy and we have got an unbelievable staff and we’re seeking to begin actually capitalizing on this. So, we look ahead to seeing you right here with Q1 report and yeah, what’s it? Two weeks?
Christopher Cashion
Two months.
Troy Meier
Two months. Two months, sorry. So, thanks once more and thanks everybody for becoming a member of us.
Operator
This concludes right this moment’s convention. It’s possible you’ll disconnect your strains presently. Thanks in your participation.
